Hi Heather,

I just wanted a clarification about the eligibility requirements for the new Pay As You Earn repayment plan. I read one of your recent blog posts, which indicated that

Only “new borrowers” are eligible to choose Pay As You Earn
You are not eligible to choose PAYE unless you are a “new borrower”.

You are a new borrower if and only if you:

  didn’t owe any money on any federal student loan as of Oct. 1, 2007, and
  received a disbursement of a Direct Loan on or after Oct. 1, 2011.

However, when I was reading the studentaid.ed.gov website, and the section of the Federal Register website on the PAYE program, it said that

(iii) Eligible new borrower means an individual who—

(A) Has no outstanding balance on a Direct Loan Program loan or a FFEL Program loan as of October 1, 2007, or who has no outstanding balance on such a loan on the date he or she receives a new loan after October 1, 2007;

In theory, could this mean that someone who had a balance on another federal student loan on October 1, 2007, but not a Direct/FFEL loan, still be eligible for the PAYE repayment plan?

I wonder if the distinction is important, because in my case I had a Perkins Loan that disbursed at the end of August 2007, but no other federal student loans. I later had a subsidized Stafford loan that I took out in 2009, and I will be taking out a Direct Loan this fall when I attend graduate school. This leads me to believe that I may in fact, through some weird loophole, be eligible for the PAYE repayment plan.

Thanks for your help!